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Large debt financing: syndicated loans versus corporate bonds

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  • Altunbas, Yener
  • Kara, Alper
  • Marqués-Ibáñez, David

Abstract

Following the introduction of the euro, the markets for large debt financing experienced a historical expansion. We investigate the financial factors behind the issuance of syndicated loans for an extensive sample of euro area non-financial corporations. For the first time we compare these factors to those of its major competitor: the corporate bond market. We find that large firms, with greater financial leverage, more (verifiable) profits and higher liquidation values tend to prefer syndicated loans. In contrast, firms with larger levels of short-term debt and those perceived by markets as having more growth opportunities favour financing through corporate bonds. JEL Classification: D40, F30, G21

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1028.

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Date of creation: Mar 2009
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Handle: RePEc:ecb:ecbwps:20091028

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Keywords: corporate bonds; debt choice; syndicated loans; the euro;

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Cited by:
  1. Agliardi, Elettra & Koussis, Nicos, 2011. "Optimal capital structure and investment options in finite horizon," Finance Research Letters, Elsevier, vol. 8(1), pages 28-36, March.
  2. Pessarossi, Pierre & Weill, Laurent, 2013. "Choice of corporate debt in China: The role of state ownership," China Economic Review, Elsevier, vol. 26(C), pages 1-16.
  3. Ettore Crocia & John A. Doukas & Halit Gonenc, 2010. "Family Control and Financing Decisions," Koç University-TUSIAD Economic Research Forum Working Papers 1004, Koc University-TUSIAD Economic Research Forum.
  4. Mircea Tiberiu Ducai, 2012. "The Bank Loans Importance, Information Asymmetry And The Impact Of Financial And Economic Crisis On Corporate Financing," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(18), pages 29-34, April.
  5. PICARD, Pierre & RUSLI, Ridwan D., 2012. "State owned firms: private debt, cost revelation and welfare," CORE Discussion Papers 2012047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Keith E. Maskus & Rebecca Neumann & Tobias Seidel, 2011. "How National and International Financial Development Affect Industrial R&D," CESifo Working Paper Series 3480, CESifo Group Munich.
  7. Bris, Arturo & Koskinen, Yrjö & Nilsson, Mattias, 2011. "The euro and corporate financing," Research Discussion Papers 6/2011, Bank of Finland.

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